Borrowers can fix their mortgage at less than three percent for 30 years

Borrowers can fix their mortgage at less than three percent for 30 years

  • This is part of a government push to encourage longer term mortgage deals
  • Specialist lender Kensington Mortgages to launch 30-year home loans
  • Most homeowners with fixed rate mortgages get stuck on two or five years
  • Long-term agreements come in a context of anticipation of an increase in interest rates










Borrowers will be able to set their mortgage rate for 30 years at less than 3%, reveals The Mail on Sunday.

Specialist lender Kensington Mortgages will this week launch fixed rate agreements on 25 and 30 year mortgage terms.

Long-term agreements are among the first of their kind.

Most homeowners who take out fixed rate mortgages commit to two or five years.

Ten-year patches are available, but few customers are opting for them, according to industry experts.

Specialist lender Kensington Mortgages will launch fixed rate deals on 25 and 30 year mortgage terms this week (file photo_

Borrowers will be betting on interest rates, however, with two-year fixed rate agreements currently available for as low as 0.99 percent and five-year agreements as low as 1.34 percent.

But Kensington’s 30-year home loans are expected to have competitive interest rates between 2.5% and 3% and will be offered on different deposit sizes.

Long-term deals come in the midst of expectations of an interest rate hike.

Andrew Bailey, Governor of the Bank of England, recently said he was “very uncomfortable” with the rising cost of living, paving the way for a rate hike.

Figures last week revealed prices had risen at their fastest pace in nearly a decade, with inflation hitting 4.2%.

Economists believe the Bank of England will raise interest rates to a record high 0.1% next month or early next year.

Ray Boulger, a mortgage broker at John Charcol, said: “It’s very rare to see a 30-year fixed rate deal.

The timing is very good. Interest rates are near their all-time lows, but are expected to rise over the next year, so now is a great time to take out a long-term fixed rate deal – as long as there is no no onerous prepayment charges.

“If it’s affordable now, it will probably be affordable for the rest of the day because you don’t have to worry about interest rates going up.”

Kensington is reportedly working with the Rothesay insurance company to use some of its £ 60bn firepower to fund the loans.

Long-term deals come amid expectations of an interest rate hike (file photo)

Long-term deals come amid expectations of an interest rate hike (file photo)

Banks tend to offer short fixed rate deals because they rely on customer deposits, which can be quickly withdrawn by savers, to fund them.

Pension and insurance companies, on the other hand, stay on cash for longer, giving them more incentive to fund longer mortgage deals.

More insurance companies are expected to enter the mortgage market to put some of their money to work in pursuit of higher income.

It’s also part of a push by the government to encourage longer term mortgage deals.

At the Conservative Party conference last year, Boris Johnson pledged to boost the housing market with longer-term loans, adding: “We believe this policy could create two million more homeowners, the strongest expansion of homeownership since the 1980s “.

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